Microsoft Names Amy Hood as First Female Finance Chief

In going with Amy Hood, Microsoft Corp. Chief Executive Officer Steve Ballmer picked an executive who has played a pivotal role in some of the company’s biggest acquisitions. Photographer: Tony Avelar/Bloomberg

May 9 (Bloomberg) -- Microsoft Corp. named Amy Hood its
first female chief financial officer, putting a 10-year veteran
in charge of debt, finances and a growing cash pile at a
software maker beset by plunging demand for personal computers.

Hood, 41, becomes CFO effective immediately, succeeding
Peter Klein, Redmond, Washington-based Microsoft said in a
statement yesterday. The search had focused on Hood, finance
chief of the business division, and Tami Reller, her counterpart
at the Windows unit, according to people with knowledge of the
matter.

As CFO of the Microsoft Business Division, Hood played a
central role in takeovers of companies including Skype
Technologies SA, and she handles finances for the company’s
biggest unit by sales and operating profit. As CFO, she’ll be
key to managing Microsoft’s $74.5 billion in cash and
investments while helping Chief Executive Officer Steve Ballmer
cope with struggles to gain share in smartphones and tablets.

“Amy always impressed me with her incredibly sharp
analytical mind combined with a nuanced understanding of
business strategy, and a willingness to take calculated risks,”
said Nokia Oyj CEO Stephen Elop, who was Hood’s boss when he was
at Microsoft.

The business division, Microsoft’s biggest, includes Office
productivity programs and generated $24 billion in sales and
$15.7 billion in operating profit in fiscal 2012. It has drawn
praise from analysts for fueling growth through acquisitions and
new product areas, such as corporate telephony and collaboration
software.

‘Sustainable Record’

Those gains are helping make up for weakness in the unit’s
core word-processing and spreadsheet applications, which are
suffering amid market saturation and slumping demand for PCs.

Sales in the Microsoft Business Division increased 24
percent and its operating margin widened four percentage points
in the two fiscal years through 2012. That contrasts with the
Windows unit, where weak PC demand led to revenue declines and
narrowing margins in that period.

The business division has “had a sustainable track record
where Wall Street doubted that business’s ability to grow, and
it’s grown every year,” said Brent Thill, an analyst at UBS AG.

Microsoft was little changed in extended trading after the
appointment was announced. It had slipped 1 percent to $32.99 at
yesterday’s close, and has climbed 24 percent this year,
compared with a 14 percent gain in the Standard & Poor’s 500
Index.

Hood’s challenge will be helping guide a company reeling
from the biggest decline in PC sales on record in the period
that ended in March.

Anemic Growth

Under Ballmer, Microsoft has revamped mobile software and
begun a foray into tablet hardware -- yet gains in both areas
have been anemic so far. Hood will also oversee the team
responsible for sales of debt, currently at $16.9 billion,
according to data compiled by Bloomberg.

Hood has a blunt, straight-talking style honed over eight
years at Goldman Sachs Group Inc. and is not afraid to tell top
executives, even Ballmer, if she disagrees with an idea,
according to a person who has worked with her.

She has also drawn the respect of the investor community,
Thill said.

“She’s super friendly to shareholders,” he said. “She’s
very approachable, open and easy to work with.”

After Hood fielded an analyst’s request for more detail on
the performance of Office 365 -- the business software delivered
via the Web, over the so-called cloud -- Microsoft disclosed in
April that the product was on pace to generate $1 billion in
annual sales, said Mark Moerdler, an analyst at Sanford C.
Bernstein & Co.

Cloud Proponent

“She’s a big proponent of the cloud and the value
proposition for the company and for investors,” Moerdler said.
“She’s very articulate, which is going to be important. We got
into a conversation of the cloud in the last meeting and you
could see her exuberance over the opportunity.”

Klein said last month that he’s stepping down to spend time
with his family, and the company said he would be replaced by an
internal candidate.

Hood began working at Microsoft in 2002 in investor
relations and then worked under Klein, handling business
strategy when he was CFO of the Office unit. Besides helping on
Skype, Microsoft’s biggest purchase, she also assisted on the
$1.2 billion acquisition of Yammer Inc. last year.

Hood, who holds a bachelor’s degree in economics from Duke
University and an MBA from Harvard University, previously served
as chief of staff for the server and tools division.

Rick Sherlund, an analyst who worked in research while Hood
was in investment banking at Goldman Sachs and has met with her
since her move to Microsoft, said the executive is “super smart
and very, very energetic.”

“She’s had extensive experience talking to investors,”
said Sherlund, who is now at Nomura Holdings Inc. and rates
Microsoft shares neutral. “Talking to Wall Street as CFO will
come easy to her.”